Federal Board of Revenue Chairman Mumtaz Haider Rizvi on Friday announced that the government will reduce a number of general customs tariff slabs up to 5-6, minimising higher slabs of customs duty in the upcoming budget (2012-13) with simplified Pakistan Customs Tariff (PCT), reducing the number of Statutory Regulatory Orders (SROs) and rationalising tariff to facilitate investment in the country.
Sharing basic outlines of the coming budget (2012-13) at a pre-budget seminar organised by Association of Chartered Certified Accountants (ACCA), Mumtaz Haider Rizvi said the government will not impose any new tax or increase rates of existing taxes in the budget (2012-13). However, the rates of the existing duties and taxes would be slashed particularly customs duty slabs would be up to 5 or 6 by clubbing the higher slabs with the lower slabs. For example, if an item falls under higher duty slabs of 35 percent, it could be brought into the lower slabs of 25 percent.
Referring to the complicated Pakistan Customs Tariff (2012-2013), FBR Chairman said that sometimes importer has to refer to the relevant SROs for applicability of the duty under the PCT creating confusion among the business and trade. At present if 10 percent duty has been mentioned in the PCT, the concessionary SRO may specify 5 percent duty on the same item which result in confusion. The revised PCT would clearly specify the exact rate of customs duty to be applicable at the import stage without consulting any concessionary SRO to end confusion. The rates of the customs duty mentioned on the page of the PCT would be exactly the same rate which would be applicable at the import stage.
He said that from July 1, 2012 customs tariff would be made transparent and predictable for the investors, rate of import duty mentioned in the Pakistan Customs Tariff would be applicable on imports and there would be no mismatch in rates of duty mentioned in tariff and SROs. He also said that FBR would try to reduce numbers of SROs for transparency purposes. The cleansing of the SROs would continue in the upcoming budget, while the whole system cannot be suddenly corrected overnight and it would take some time to gradually improve the system by taking measures in the right direction.
Mumtaz Haider Rizvi stated that it is a high time for the provinces to share burden of taxes and help the tax machinery in bringing the retailers into the tax net. If it is difficult for the FBR to reach the un-registered retailers, the tax authorities are seriously thinking to engage provinces for bringing retailers into the documented regime. There is a growing realisation that the provincial governments should increase their role in improving tax-to-GDP ratio of the country. They should gear up their efforts for playing their due role in improving overall revenue collection of the country. It is high time that the FBR should joint hands with the provinces to increase taxes and bring the retail sector into the tax net. One effective way of reaching retailers is to approach the retailers through the provinces, cities, towns. This would be made part of the budget proposals to ensure documentation of the retailers with the help of provincial governments.
The FBR Chairman said that if the Sindh Revenue Board (SRB) can generate Rs 19 billion from sales tax on services, there is a huge potential of provinces to generate additional revenue. He commended the revenue collection of Rs 19 billion by Sindh Revenue Board and suggested other three provinces to come up with similar arrangement of tax collection to diversify their resource mobilisation options.
The FBR Chairman said that the budget (2012-13) will be investment, employment and growth-oriented. The characteristics of the new tax system will be made part of the federal budget (2012-13). The key features of the new tax system are: Tax system should be simple and transparent to understand. Tax system should be simple to follow by the taxpayers. It should be progressive so that persons earning more should pay more taxes. The tax system should be equitable for payment of taxes by all as per their capacity. The purpose is to put the whole system in the right direction which would be gradually improved in future.
Mumtaz Haider Rizvi said that the role of the regulatory bodies including Engineering Development Board (EDB) should be minimised in the granting permissions and clearances for the importers. The EDB is playing its own role in protection of local industry etc and we will try to bring more transparency in the working of the EDB.
Talking about the on-going pace of revenue collection, FBR Chairman said that despite all economic problems and load shedding etc, the FBR has not only surpassed the revenue collection target during July-March (2011-12), but is also on the track till date. This would enable the Board to meet the revenue collection target of Rs 1952 billion by the end of current fiscal. The tax machinery is confident that the FBR will also be able to achieve the tax projections for the next financial year.
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